The Chainlink

Divvy costing taxpayers big...

... according to this item from the Illinois Policy Institute:

http://illinoispolicy.org/blog/blog.asp?ArticleSource=6230

I have real basis on which to form an opinion. I have yet to try Divvy (I have plenty of my own bikes) and don't live in Chicago. A friend at work passed the link along.

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Permalink Reply by globalguy on October 5, 2013 at 2:59pm

+1: Of course that would require one of our "esteemed investigative journalists" to actually investigate ...


h' 1.0 said:

If the cost of these bikes really is $5100 each, it would be great if one of our esteemed investigative journalists could do some work ...

Permalink Reply by Thunder Snow on October 5, 2013 at 3:39pm

A fair per-bike comparison would be to the New York, Washington DC, Montreal, London or Paris bike-share systems.  Is Chicago really that much more expensive than these other systems? (I truly don't know.)  If push came to shove, I'd be willing to sacrifice the "Halsted Flyover" at the Circle Interchange, plus the "Illiana Expressway" planned for Peoria, to make up any Divvy shortfall.

Permalink Reply by Tom Dworzanski on October 5, 2013 at 3:57pm

Each Divvy bike clearly states on the handlebars that there is a $1,200 charge for a bike that is not returned. Based on the costs of steel bikes most of us know well, I'd say that sounds about right.

Permalink Reply by h' Zerocats on October 5, 2013 at 4:02pm

Is your google images broken?

Clearly, "Adam Herstein" is Brian Costin.



Duppie 13.5185km said:

I am starting to think that Reboot Oxnard is Brian Costin.

Permalink Reply by Tom Dworzanski on October 5, 2013 at 4:09pm

Are you involved in bicycle manufacturing or something close? If so, please share your insights into the costs of these bicycles and explain why they seem to be so high.

 

Jeff Schneider said:

As for how much the bikes should cost,  being in manufacturing I might know better than you.



There are A LOT of this same style of bike-share bicycle going into use around the country and adding them all up would probably equal upwards of 10,000 units. That seems like a pretty significant run.


Jeff Schneider said:

I don't agree that police bikes are a good comparison.  They are just slightly modified very high production run hybrids.

Permalink Reply by Drewbacca on October 5, 2013 at 5:02pm

Yeah, I was thinking along these lines... and wondering how much of that cost-per-bike actually gets canceled out in the long run. I'm certainly not playing fiscal-conservative here, I'm just questioning if the number was inflated worst-case-scenario stuff and by how much.

Michael Hulburt said:

It seems like that number is the $65 million divided by 3800 bikes. Obviously, the bikes aren't the only thing that has to be paid for to get the program running and to maintain it—ental stations, payment software, the bikes, bike and station maintenance, the blue vans that redistribute the bikes, and their drivers, to name a few.

Permalink Reply by Drewbacca on October 5, 2013 at 5:04pm

True... between military spending to "defend" our oil supply and all that free on-street parking, we don't see the true cost of automobiles. 

Jeff Schneider said:

I would also like automobile users to pay the total costs for their transportation choice.  For example, property taxes are used for a large portion of street maintenance expenses (including the cost of providing "free" on-street car parking).  Everyone who pays for a place to live pays property tax directly or indirectly.  "Free" on-street parking alone is a government subsidy for car drivers worth about $1k per car annually in my estimation.

It seems strange to me that bike-share should be the *only* transportation system that is expected to be profitable for taxpayers. 

Permalink Reply by Thunder Snow on October 5, 2013 at 9:42pm

Yep, if the Illinois Policy Institute is really watching out for the taxpayers, they'd get more bang for the buck by coming out against the Illiana Expressway, planned for the south suburbs/exurbs.  Instead of worrying about spending millions on Divvy, which creates a fairly green transportation alternative here in Chicago, the Institute should come out swinging against paving over some of the world's most fertile farmland here in Illinois, extending suburban sprawl into yet more Illinois counties, costing taxpayers at least $1.3 billion.  Don't get me started on the knuckleheaded "Halsted Flyover" being built in Greektown for who knows how much money, intended to save out-of-state truck drivers a few seconds traversing the Circle Interchange.  But highways are IMPORTANT INFRASTRUCTURE (even if those of us without cars may never use them in our lifetimes) and bikes are...toys.  I think the Illinois Policy Institute members see Divvy bike sharing as government funded skateboards or Lego sets.

 

*Just looked at a map of the proposed roadway.  Obviously, my downstate geography is lacking. It looks more like Channahon or Manteno east through Beecher, and on to Indiana, rather than further down in Peoria, as I had thought.  My bad.  But my point at relative spending: billions for roads, millions for bikes, with no complaints about road spending...is still valid.
 
Jennifer on the lake said:

Peoria?

Permalink Reply by h' Zerocats on October 6, 2013 at 2:41pm

It's "crooked" because an article linked earlier in this discussion quotes the guy who didn't win the bid as saying so.  Why can't you just accept that?

Jeff Schneider said:

How about a business explanation...

Alta has a contract to provide goods and services.  The price they charge for an individual good or service is not necessarily proportional to their cost to provide that good/service.  In other words, their margins are not necessarily the same or even close on all the different goods and services provided.  It makes no sense to pick out one item and say it's unreasonable.  You can only look at the contract as a whole, and say whether or not you think the value provided is worth the cost.

At first blush, it looks to me like total costs are in line with other systems around the world.  But others may know more about that than I do.

What really bugged me, and what motivated me to write so much on this thread, was Reboot's accusation that the deal was "crooked".  It's a very serious thing to accuse people of criminality.  When you do it, you had better have some real evidence, or be prepared to write a nice apology.

So far, neither evidence nor apology has been forthcoming from Reboot.

Tom Dworzanski said:

Are you involved in bicycle manufacturing or something close? If so, please share your insights into the costs of these bicycles and explain why they seem to be so high.

 

Jeff Schneider said:

As for how much the bikes should cost,  being in manufacturing I might know better than you.



There are A LOT of this same style of bike-share bicycle going into use around the country and adding them all up would probably equal upwards of 10,000 units. That seems like a pretty significant run.


Jeff Schneider said:

I don't agree that police bikes are a good comparison.  They are just slightly modified very high production run hybrids.

Permalink Reply by Tom Dworzanski on October 6, 2013 at 3:26pm

Well there definitely doesn't seem to be anything criminal in any of this.


Jeff Schneider said:

What really bugged me, and what motivated me to write so much on this thread, was Reboot's accusation that the deal was "crooked".  It's a very serious thing to accuse people of criminality.
Permalink Reply by Reboot Oxnard on October 6, 2013 at 5:07pm

I asked you for an explanation, based on the experience you say you have in manufacturing of some of the particular details about why you think this contract is most likely fair and reasonable. Fairness then requires me to share the same based upon my experience. As someone who has been directly involved as a vendor in thousands of contracts with federal, state and local (including Chicago) public purchasing agencies, I can tell you two things with certainty that this contract process should give everyone pause. It has many of the hallmarks of a crooked deal, including:

  • ·         A 30-day RFP. This contract was let via a Request for Proposal, not a Request for Quote; the difference is not semantics. When the city wants to buy a bunch of rock salt for the roads or printer paper, the items they are looking to buy are well understood and readily available from a large number of sources and all they need to do is let those sources know what they want, how much of it they want, where it needs to be delivered and what the payment terms are. Easy, peasy, all they want is a price, so they issue an RFQ.  A large contract for an unusual project, on the other hand, is far more complex and would normally require an RFP and have a longer window to allow prospective vendors time to assemble a qualifying proposal. There are a number of possible reasons for the relatively short window, from experience I’ll tell you that one highly likely possibility is that there was a vendor for whom the bid was intended and what the agency was really looking for were enough additional bidders to provide a smoke screen to disguise that this was essentially a no-bid contract. This happens with disturbing frequency – not just in Chicago but more often here than many other places.

  • ·         The specifications. You may think that a high-end heavy-service bike like the Trek Police bike doesn’t correlate well to the Divvy bike and maybe it doesn’t but is there any meaningful performance difference? Why isn’t a police bike suitable for Divvy use? What is it that makes a bike designed for hard use, a proven design that is mass-produced unsuitable and requiring a substitute that is several/many times as expensive? The police bikes are ridden for more miles/hours/days than the Divvy bikes ever will be in exactly the same environment as the Divvy bikes by people who are undoubtedly better riders but also riding far more aggressively than Divvy bikers. I used the Trek police bike as an example because at $1200 it is a high-end bike – by way of comparison, the Fuji police bike only costs about $600, per. One of the easiest ways to engineer the results of a bid award is to draw the specifications so narrowly that there is only one qualified response available – and that means you can’t rely on a mass-produced nearly commodity product but will must use a unique and, preferably, impossible to duplicate (think copyrights and patents) design.

  • ·         The cancellation of the RFP. RFPs are rarely canceled, usually because the agency has made a mistake that it can’t fix in a timely manner; otherwise they issue a modification and extend the date to allow additional time to prepare a proposal. In this case, however, reports are that Alta didn’t meet the vendor requirements to do business with the City, in which case they should have been disqualified and the other proposals considered – problematic if the fix is in for Alta. We don’t know what happened to this RFP because the City has refused to explain – also very unusual – but we do know that Alta was able to straighten out their license problem and have a second shot at the prize when the City issued a new RFP.

  • ·         The award. In an unusual maneuver the contract was not awarded by the purchasing department but by a vote of the City Council. This isn’t way out of whack for a large contract but an indication that this contract was too important to leave to the purchasing department or that someone wanted them out of the process. 49 – 1 is another indication that there was political strong-arming and horse-trading behind the vote, what is known in Chicago as, “the fix was in.”

  • ·         The modification. Despite two attempts at writing the specifications for the contract via the RFPs, upon award the contract was almost immediately modified, extending it from one year to five and increasing its value from ~$30 million to ~$65 million. This is not as unusual as it should be and is, for anyone who has followed the shenanigans at Northerly Island, an excellent way to exclude otherwise competent vendors.

All-in-all there is no smoking gun proof that this deal was crooked but lots of circumstantial evidence points that direction. Responsible stewardship of public funds demands that the possibility be considered, not dismissed just because we like what it being done with the money. This is Chicago, after all; we’d like to think it never happens here but we know otherwise. As to the use of the word, "crooked", just as because a rim is bent doesn’t necessarily mean a spoke is broken, a crooked deal doesn’t mean any laws were broken. Indeed, the essence of public crooked behavior is that the people that are bent are also the ones writing the rules and controlling the process – unless they’re daft toadstools they’re going to make sure they don’t need to break any of them. This isn’t a Democrat/Republican or Progressive/Conservative thing, this is a hairball thing and hairballs are a full-spectrum disorder. In sum, then, as someone who has lived in Illinois for decades and watched the bid process both from the outside and in, I stand by my assertion: this was a crooked deal.

 

TL:DR, I suspect but fairness required more than a sound-bite kind of answer. I hope this helps. Let me close by restating: I’m a supporter of shared bike programs and although I think this deal was crooked I have the fondest hope that Divvy becomes a success. It matters to you and to me. The chances of that success happening are hurt if we stick our collective heads in the sand and refuse to directly confront any shenanigans that might hurt its chances. Allowing the costs to be driven to ridiculous heights by profiteering corporations and politicians is certainly not going to improve the chances of success and that is a rot that I assume you would like to prevent. I know I do.


Jeff Schneider said:


What really bugged me, and what motivated me to write so much on this thread, was Reboot's accusation that the deal was "crooked".  It's a very serious thing to accuse people of criminality.  When you do it, you had better have some real evidence, or be prepared to write a nice apology.

So far, neither evidence nor apology has been forthcoming from Reboot.

Permalink Reply by Adam Herstein on October 7, 2013 at 10:18am

Well, my tax dollars go towards building of highways…

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